HKEX chief expects more IPOs under Hong Kong’s new listing regime after summer break

Companies need time to prepare for listings, says Charles Li Xiaojia

PUBLISHED : Friday, 18 May, 2018, 6:33am
UPDATED : Friday, 18 May, 2018, 6:33am

Charles Li Xiaojia, chief executive of the Hong Kong bourse operator Hong Kong Exchanges and Clearing, said on Thursday he believed more companies would apply for initial public offerings under a new listing regime after the summer holiday.

“Many inquiries have been made regarding the new listing regime. These companies’ sponsors and other professional teams need time to prepare their listing documents. We hope they can file before the summer holiday in July and August. Otherwise, they are more likely to file in September or October, after the holiday,” Li said on the sidelines of LME Asia Week 2018.

Hong Kong’s new listing rules draw just two applications, far fewer than expected

I think we will see many more applications in the coming months
Stephen Chan Yiu-kwong, partner, Dechert

After four years of debate and consultation, the HKEX kicked off its largest listing reform in 25 years on April 30, allowing technology giants with dual-class shareholding structures and biotechnology companies without revenue to list in the city.

About three weeks later, however, only two applications have been received by the bourse – among them Xiaomi’s mega IPO. The Beijing-based smartphone maker filed its application to list in the city on May 3, becoming the first company to do so under the new regime. 

And Hangzhou-based Ascletis Pharma, which is close to commercialising a new drug to treat Hepatitis C in the mainland China, became the first pre-revenue biotechnology company to apply for a listing. It submitted its application on May 7.

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No new applications have been submitted since. Li said he was unaware of any overseas Chinese technology companies looking to apply for secondary listings in Hong Kong.

“The new listing regime has been around for about three weeks and we cannot expect all applicants to flood in and make applications. The candidates will need time to prepare for their listings. I am confident there will be more applications after the summer holiday,” he said.

Stockbrokers too were optimistic about more listings to come under the new regime. “Many listing hopefuls will let their sponsors start the documentation for listing applications only after they have received the details of rule changes. This is why few companies will be able to file applications during the early stages of the new listing regime,” said Gary Cheung, chairman of the Hong Kong Securities Association.

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Stephen Chan Yiu-kwong, a partner at global law firm Dechert, said many biotechnology and new economy companies had expressed an interest in a Hong Kong listing, but they needed more time.

“I think we will see many more applications in the coming months, as many potential applicants are gearing up for the submission of their applications,” said Chan. “I don’t think it is surprising as the preparation of the listing application takes quite a while, and it is also relatively costly, so some potential applicants may want certainty before kicking off the IPO process.”